30th December 2016 - Property in Gurgaon - 2016 Review and looking forward to 2017
As far property is concerned in Gurgaon, 2016 was as dull in terms of transactional activity as in 2015. There were however notable announcements and events during the year. I would say that although 2015 and 2016 were both slow in terms of activity there were some notable differences.
Volume of demand was fairly equivalent in both years only there seemed to be higher end demand in 2015 than 2016. However transactions were slightly more prevalent in 2016 in line with the slow pickup of the economy in the first half of 2016.
2016 saw an influx of office space demand on the leasing side with a large number of small and medium size enterprises getting attracted to a market where there was a requirement for 1000 – 5000 sq. ft. The demand pattern seemed more inclined to furnished space requirements as was in the case in 2015. On the rare occurrence we received an office space occupier for 50,000 – 60,000 sq. ft. however deals failed to mature owing to strategic rather than cost impetus.
On the residential side, sales were slow during 2016 with both secondary and primary markets being virtually stagnant. Price corrections in high end properties did take place but more so in older aged properties. Sellers found it hard to sell given an expectation mismatch leaving them more or less illiquid. Office space sales were even less with companies choosing to lease rather than buy.
Residential market rentals also saw a correction in certain localities owing to a wide array of choices in terms of accommodation, however there are micro-markets where they did increase by 5-10%.
In terms of structural announcements and changes the nod by the centre on RERA (real estate regulation act) which has recently been implemented in some states and will filter through to other states including Haryana, alongwith the demonetization move and perhaps the property benami eradication act are all steps in terms of streamlining the market.
RERA will give end users relief and fair terms and was only a natural step after many a case being raised by consumers in the courts visa vi grieviances against developers. There will be a consolidation of property developer players I believe once RERA is implemented in all states. On the impacts of demonetization I believe we are moving to a more transparent and mature market structure. Prudent sellers will wait till the market takes a turn for the better and I see a large proportion of people who were earlier in the cash system of things turning towards full cheque transactions. Prudent buyers would wait and watch the market for a bit, although there may be some good buys out there in the market across segments.
Lastly FDI interest in real estate has been strong in 2016 though more inclined to the office sector. It is expected to regain momentum in the latter half of 2017. The pie is likely to get split with the residential segment as was the case prior to the international financial crisis in India but this time on the backing of stronger end user rather than speculative fundamentals.
Market should pick up in good swing post 2017. My best wishes for the new year to all!
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